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IFAs paying an unfairly high price

It comes as little surprise to read that, now the FSA-orchestrated hindsight review of mortgage-related endowments is finally fading into history, we are seeing a dramatic increase in the proportion of complaints against banks and other big financial services organisations.

What this tells us is that the business transacted by IFAs represents the lowest risk to consumer interests and thus that we require less regulatory supervision (interference?) than any other part of the financial services industry.

Yet it seems that the better we get at what we do and how we treat our customers, the heavier becomes the burden of regulatory imposition.

The regulatory levies I have to pay just to be allowed to continue trading now total £2,800 for the current year, the single biggest element of which is the FOS levy. Yet IFA business, we now learn, is responsible for just 4 per cent of the FOS caseload. Is this fair treatment of IFAs? I think not.

Much has been written of late about how the FOS is funded, with various suggestions for change. My suggestion is that once the FOS has determined its budgetary requirements for each coming year, it should then look to divide this in proportion to the likely sources of its caseload.

Thus, the IFA sector as a whole would be required to meet 4 per cent of the total while the banks and similar organisations would be required to meet the remaining 96 per cent. Would this not be fair and just?

As things stand, the battered IFA sector seems to be forced to pay levies that are totally disproportionate to the numbers of cases referred to the FOS that are generated by the business that we transact. The banks are vastly better capitalised than most IFAs, the business they transact generates vastly more complaints that end up being referred to the FOS and yet they are allowed to get away with levies that bear no relationship to these facts.

As David Barnett says, the best advice that tied and multi-tied agents can give their customers is to go to an independent.

Can the FSA not see this? I strongly suspect that it can and does but getting the FSA to do anything about it is another matter.

Julian Stevens
Harvest IFM Bristol


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